SK Hynix’s perpetual contract has seen annualized funding rates average around 64% since its listing, prompting Boros to introduce a funding rate market that lets traders stabilize these costs.
The South Korean chipmaker’s American Depositary Receipts (ADRs) are trading at a premium surpassing 20% compared to their Korean-listed shares, due to an oversubscribed $26.5 billion US ADR offering priced at $149 per share. This has created an arbitrage opportunity where investors buy cheaper Korean shares and short the pricier ADRs, anticipating price convergence once the ADR-to-share conversion window reopens on July 29.
The catch is extreme volatility in funding rates on Hyperliquid’s SKHYNIX perpetual contract, which have fluctuated between annualized rates of -452% and +276% in a single day, threatening the viability of arbitrage strategies.
Boros, built by Pendle on Arbitrum, offers a solution by tokenizing yield units that allow traders to convert their variable funding rate exposure into a fixed rate, simplifying risk management. Early implied APRs on the Boros platform for SKHYNIX funding rates range from 18.99% to 40%, with initial trading volumes between $30,000 and $42,000.
This innovation permits arbitrageurs to precisely hedge the funding cost of shorting SKHYNIX perpetual contracts while holding Korean shares, enabling clearer profitability calculations before executing trades.
